Stock Market Outlook for June 14, 2022
While the charts appear outright horrific, this is not the time to become more negative in investment portfolios as sentiment reaches another bearish extreme.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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iShares S&P/TSX Capped Materials Index ETF (TSE:XMA.TO) Seasonal Chart
Invesco QQQ Trust (NASD:QQQ) Seasonal Chart
Kinross Gold Corp. (TSE:K.TO) Seasonal Chart
iShares S&P/TSX Global Gold Index ETF (TSE:XGD.TO) Seasonal Chart
Infinity Pharmaceuticals, Inc. (NASD:INFI) Seasonal Chart
Myriad Genetics, Inc. (NASD:MYGN) Seasonal Chart
The Markets
Stocks fell under significant pressure on Monday as fears pertaining to the state of inflationary pressures and the path toward normalization of monetary policy had investors shedding risk. The S&P 500 Index fell by just less than 4%, undercutting the May low at 3810 and once again confirming the path of lower-lows and lower-highs. The moves over the past three sessions have charted a three black crows pattern, which consists of consecutive long-bodied candlesticks with daily closes around the lows of the session. While theory suggests that this pattern sets the stage for lower values ahead, it is typically observed as a reversal of an uptrend, something that we have not seen since the end of last year. Either way, the action over the last few sessions points to the flood gates being opened and investors just wanting out. Declining trendline support for the benchmark can be pegged around 3735, a hurdle that was tested at the lows of the session, but two zones of gap resistance overhead creates hurdles that are in a position to cap any rebound attempt. Monday’s downside gap can be plotted between 3840 and 3900 and Friday’s downside gap is apparent between 3975 and 4020. While we could see a gap-fill in the days ahead given how short-term oversold the market has become, investors may use the opportunity to sell into these zones should they be tested. MACD has triggered a renewed sell signal following Monday’s downfall as, similar to prices, a path of lower-lows and lower-highs resumes. Unfortunately, while still early to conclude definitively, we are obviously seeing degradation of the base that we had been expecting of the market heading into the back half of June, something that was speculated to draw in broader participation for a more sustained period of strength for stocks between the end of June and into the month of July. The outcome of the FOMC meeting on Wednesday is the next pivotal event for the market and it will provide legitimacy over whether the recent price action in the market over the past couple days following the release of Consumer Price Index report was justified.
Today, in our Market Outlook for subscribers, we discuss the following:
- Our stop has been triggered for our bond allocation
- One of the few areas of strength during Monday’s session
- Notable ratings changes in this week’s chart books
- Three industries entering their optimal holding periods today that appear enticing
- The rebound in shipping volumes for the month of May
- Investor sentiment back to a bearish extreme
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Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.34.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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